June 12 (Bloomberg) -- The African Union urged Sudan and
South Sudan to accept its proposal for a demilitarized zone to
help end a dispute that the continental body said threatens
regional stability.

The two countries broke off talks last week after failing
to resolve a disagreement over territory. Sudan rejects southern
claims to areas including the disputed oil-rich region of
Heglig. South Sudan has proposed the Permanent Court of
Arbitration in The Hague help resolve the issue.

“The future viability of Sudan and South Sudan lies in
balance,” African Union Commission Chairman Jean Ping said in an
e-mailed statement from Addis Ababa, the Ethiopian capital where
the two countries are holding talks. “The adoption of a
temporary security line for purposes of a cessation of
hostilities in no way prejudices the final status of the
boundary between the two countries.”

Relations between the two countries have deteriorated since
South Sudan seceded from Sudan in July after a referendum on
independence intended to end a two-decade civil war. The south
kept three-quarters of the formerly united country’s oil output
of about 490,000 barrels a day. Tensions between the countries
escalated in April when South Sudan occupied the contested, oil-rich area of Heglig, before pulling its troops out 10 days
later.

Negotiations will resume on June 21 to discuss a dispute
over the fees South Sudan should pay to export its oil through
pipelines and processing facilities in Sudan, as well as
territorial and security issues.

Temporary Security

South Sudan accepted the AU’s plan for a proposed temporary
security border, while officials from Khartoum, the north’s
capital, rejected it, Ping said.

“Objections by either state to the proposed Safe
Demilitarized Border Zone based on claims to sovereignty or the
final status of disputed areas are irrelevant and are founded on
a basic misunderstanding of the purpose,” he said.

As well as establishing the zone, the AU plan calls for an
end to hostilities, propaganda and the backing of rebels, as
well the activation of a border monitoring mechanism and
establishment of a joint committee to investigate complaints,
according to the African Union statement. The parties must also
agree on the final status of the contested region of Abyei.

Both Sudan and South Sudan face sanctions if they don’t
meet an Aug. 2 deadline for the conclusion of negotiations set
out in a United Nations Security Council resolution passed last
month.